Friday, August 12, 2016

What Are the Effects of a Bad Credit Score?

Today's guest post is about a topic dear to my heart: money. I am proud to say my hotfinancially smart husband and I have always paid our bills on time and so we both have amazing credit scores. I am teaching my daughters to make sure they marry a guy with a high credit score because, ladies, SECURITY IS SEXY! (and no, I was not always smart with money and there was a time in my young years when I was bouncing checks all over Kansas City, but that's a story for another day and I definitely learned from that!)

Anyway, a good credit score is what got me my dream vehicle. And a good credit score is what got us pre-approved to get our house in the country ... when it finally goes on the market and I'm hoping it's this one again and that it's a flipping STEAL!

Do whatever it takes to pay your bills on time, don't max out your credit cards and then pay them off a tiny bit at a time, don't buy more crap than you can pay for. And if you do, get yourself a second and third job and knock it out. Rant over.

We are always being told how important it is to have a healthy credit score. But many of us don’t really understand why it is so important. If you didn’t know, your credit reports and score provide information on your financial history. This includes late repayments, applications for credit, and debts you may have. If there are too many negative factors, it can lower your score and prevent loan approvals. This can stop you from becoming a homeowner or keep you from being able to pay off your debts.

A bad credit score will affect not only your financial situation but could put areas in your personal life at risk too. If you’re not convinced that a credit score is something you should worry about, here are some negative effects you should read through.

Strain on your relationship

If you or your partner has a poor credit score, it can put a huge strain on your relationship. You might not be able to get approval for a mortgage which could mean you have to put your plans for children on hold. Or you might unintentionally lower their score by falling behind on payments on a joint loan or credit card. Your credit score might even prevent you from getting a phone contract which can stop you from communicating regularly. If you don’t attempt to boost your credit score, it’s likely your relationship will breakdown as a result. Talk to your partner openly about your score and work together to start improving it.

A bad credit score can prevent you from getting a mortgage to buy a home. But it can also stop you from renting a property too. It’s not uncommon for landlords to check the credit scores of new tenants. Those will poor scores will be considered a risk and less likely to pay their rent and bills on time. Understandably some landlords can be put off by this, and you may be limited to where you can live. If your current lease is coming to an end soon, you may need to contact fast credit repair services to see if they can assist you. Otherwise, you may find that your family has nowhere to go.

Higher interest rates

There are companies out there who pride themselves on offering loans to people with bad credit scores. While this may seem like an ideal solution, it doesn’t always work in your favor. Often these companies will offer loans with sky-high interest rates, meaning you have to pay a lot more than you initially borrowed. Many of them will have restrictions on how the money is spent and the timeline for repayment too. This is often why financial advisors will recommend against applying for a loan through these companies. If you aren’t able to abide by their terms or pay off the interest, your home and belongings could be at risk.

If you want to avoid these bad credit effects, check your score online and start improving your score if need be. Even though you may not need a loan now, you may in the future.

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